Bob Evans/American Greetings: Is this REALLY economic development or corporate economic extortion?

The Columbus Dispatchis reporting that the State of Ohio is spending nearly $8 million ($8,000,000) in incentives to help Bob Evans move its corporate headquarters roughly 20 miles from Columbus to New Albany. That works out to about $400,000 in State tax dollars per mile. Folks, and that’s not to create a single job. For a company that made last year over $1,700,000,000 in sales and made $70,000,000 in profits, you’d think they could handle their own move.

We can find $8 million to relocate 350 jobs in Ohio, but Kasich concluded that we couldn’t afford the 3C passenger rail system that even conservative estimates said wouldn’t need any state funding until 2017 and the most conservative estimate was it would create 4,000 jobs (other estimates had it over 10,000)?

Here’s what the Dispatch reported the State is committing or had indicated it would likely commit to do:

Bob Evans was offered an incentive package from the state that includes: a Research and Development Investment Loan of $3 million; a Ohio Job Creation Tax Credit of $2.4 million; a Research and Development Investment Tax Credit of $1.05 million; a Roadwork Development (629) Account (to the City of Columbus) for $750,000; a Rapid Outreach Grant for $250,000 and an Ohio Workforce Guarantee of $250,000, said Bethany McCorkle, development spokeswoman.

A 166 Direct Loan was also awarded to CIC of Delaware for $4.1 million to redevelop the existing Columbus headquarters campus, 3700 S. High St., she said in an e-mail.

Bob Evans today at the press conference swore up and down that they were totally serious about moving to Texas unless they got this deal which, as we noted early, moves the company closer to the CEO’s home. No word yet on what, if anything, Texas offered.

But we know this, there was definitely a bidding war between Columbus and New Albany, and the Mayor Coleman’s office is declaring that any talk about Bob Evans considering moving out of Ohio was pure hogwash:

[A Coleman spokesman said to the Dispatch that] Bob Evans told Coleman that it "had no intention of leaving the state of Ohio."

Was Bob Evans serious about moving to Texas or did they just dip their toe in the water to create a bidding war of corporate welfare to get taxpayer to pick up part of the tab to help them move to a better neighborhood? We’ll never truly know.

Just like we’ll never truly know if American Greetings in Brooklyn, Ohio was truly ever seriously considering moving out of Ohio. Just like Bob Evans, American Greeting was looking at sites mostly in Ohio, but they threw in two sites in Illinois to, again, create a bid war for corporate welfare.

What was American Greetings’ explanation for considering to move? Well, it was supposedly the .5% (yes, you read that correct, half a percent) increase in the City of Brooklyn’s payroll tax. When they announced over a year ago that they were exploring moving, they said they wanted to move to community that paid lower taxes.

Which is precisely why Illinois was never a threat, they just increased their corporate tax rate by nearly 3%. American Greetings needed a bigger corporate welfare package in Illinois just to break even with Ohio. Given that was the only State bidding for American Greetings, it really wasn’t under any threat of leaving. But that didn’t stop Kasich and the GOP legislature in giving a massive tax giveaway to American Greetings this week in legislation that was hurried passed with bipartisan support to keep American Greetings from moving to a State where it would have to pay more in taxes.

In total, the Cleveland Plain Dealerreports that American Greeting is getting a package of loans, grants, and tax credits “worth a potential $93.5 million over 15 years” to a company that still hasn’t committed to staying in the same Ohio community because it’s still engaging in a bid war with those Cleveland suburbs.

According to Clips & Comments, American Greetings has $883 million and saw its profits go up 9% last quarter! And yet, it was able to take a .5% payroll tax increase (i.e. what it withholds to pay their employees’ tax obligations) and panic this new Administration and the Ohio General Assembly that we taxpayers are on the hook for the next 15 years to give $93.5 million to an already profitable company for no other reason that an elected leaders feared it might move to a State where taxes are already higher and going up even faster!

It’s not a sign of stability at all. What it is a sign of is we have a corporate sucker as a Governor who panics at the first sign of a company threatening to move out that he just throws the State checkbook at them and begs them to write down whatever it’ll take to get them to “change” their minds. Kasich has signaled to the entire business community that he’s a weak negotiator and desperate for accomplishments.

Two days ago, our sibling blog, Ohio Budget Watch, reported that the House Finance Committee added a $10,000,000 tax break for the oil industry when it passed Kasich’s transportation budget (to be clear, yes, I’m saying they ADDED a corporate tax break that not even Kasich had requested). This in the same budget that calls for $30,000,000 less to support public transportation in the State. We can’t find $30 million for public transportation, but we can find room for $10 million in more tax cuts to the highly subsidized oil industry?

Kasich’s considering proposals to cut money for food banks and child care subsidies in addition to SB 5. If you’re a large business, all you have to do is make the slightest threat, and millions of State assistance is coming your way so long as you’re willing to pose with Kasich for the cameras. But if you’re a parent who needs help with the expense of child care while you work, Kasich’s attitude is “Fuck you, freeloader!”

Given that we obviously cannot appeal to this man’s humanity in these cuts, perhaps he should consider the economic angle. Without a robust and economically secure middle class, nobody is going to have anything to celebrate with a greeting card. They’ll be no families able to sit around a table and enjoy a nice warm pie at Bob Evans.

The middle class is your seed corn, Johnny. Not big corporations. In other words, sir:

I don’t know the answer yet, but I feel the need to point out that the money to redevelop the now-former Bob Evans HQ site is coming from the State’s 166 loan fund. That is money available for economic development projects as a result of floating bonds against the state’s liquor profits.

Recall that Kasich has hinted that he will privatize the state’s liquor monopoly, which would eliminate liquor profits as a source of funding for economic development programs. So not only are we paying to cannibalize Columbus jobs by moving them to New Albany, we are now cannibalizing economic development programs to rake in some one-time money to balance the budget.